Shares of Snap Inc. were soaring 4% Thursday as the stock saw a rare upgrade from an analyst who called the stock a “compelling risk/reward” opportunity.

Stifel, one of the underwriters on Snap’s
SNAP, -3.47%
initial public offering, upgraded the stock to buy from hold, saying that investors are “overreacting” to Snap’s impending lock-up expiration. Furthermore, Scott Devitt, lead analyst on the note, says he does not think Snap’s user growth is decelerating as much as other analysts had feared.

Snap has been facing increasing competition from Instagram Stories, owned by Facebook Inc.
FB, -6.77%
, which have surpassed Snap in terms of daily active users, and continued to add new features. That competition has led several analysts to take bearish positions on Snap, particularly related to its user growth.

However, Devitt says he believes Snap’s growth remains stable, as he has seen downloads of the app remain stable in the markets where the company makes the most money from its users. In those markets, namely North America, he said the rankings of Snapchat’s app are on par with those of Instagram.

“We do not believe the wheels are falling off Snap’s user growth story,” Devitt wrote.

Additionally, he sees strong user engagement on Snapchat, with users creating more than three billion Snaps per day, up from 2..5 billion in the third quarter of 2016. In the first quarter of 2017, users were spending more than 30 minutes on the app, while they were spending 25 minutes to 30 minutes previously, as listed in Snap’s prospectus, which first came out in February.

Devitt kept his $22 price target.

The average rating on FactSet is hold and the average price target is $20.29.

Snap has at least 950 million shares that will be available July 31 after a lockup expires, allowing insiders and large investors to sell shares for the first time since Snap’s March IPO. While many analysts and short sellers are betting that there will be a big sell-off around this event, Devitt believes many will hold onto their shares as about 60% are held by Snap executives, with about 50% of those held by Snap’s co-founders.

“We think investors’ anticipation of the event could be more impactful to the stock than actual selling from the lock-up expiration,” Devitt wrote.

Earlier this week, Morgan Stanley, one of Snap’s lead underwriters, downgraded the stock to equal weight, largely based on weakness in its ad business, as Instagram takes a greater share of ad dollars.

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